EXECUTIVE COMPENSATION TABLES
The following tables and accompanying narrative set forth information about compensation provided to our NEOs who are as follows:
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Gareth T. Joyce | President and Chief Executive Officer |
Karina F. Padilla(1) | Chief Financial Officer |
Julian R. Soell | President, Proterra Transit |
Christopher L. Bailey | President, Proterra Powered & Energy |
JoAnn C. Covington(2) | Former Chief Legal Officer, Head of Government Relations and Secretary |
(1) Ms. Padilla resigned from her position as Chief Financial Officer effective May 15, 2023. (2) Ms. Covington resigned from her position as Chief Legal Officer, Head of Government Relations and Secretary effective March 27, 2023.
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SUMMARY COMPENSATION TABLE
The table below summarizes the total compensation awarded to, earned by or paid to each of our NEOs for the fiscal years ended December 31, 2020, December 31, 2021, and December 31, 2022, in each case with respect to each NEO who was an NEO in the applicable year.
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Name and Principal Position | Year | Salary ($) | Bonus ($)(1) | Stock Awards ($)(2) | Option Awards ($)(3) | Non-Equity Incentive Plan Compensation ($)(4) | All Other Compensation ($)(5) | Total ($) |
Gareth T. Joyce(6) President and Chief Executive Officer | 2022 | 499,038 | | — | 2,520,544 | | 1,355,794 | | 339,375 | | 23,804 | | 4,738,555 | |
2021 | 372,926 | | — | 286,397 | | 258,433 | | 124,208 | | 13,346 | | 1,055,310 | |
2020 | 38,054 | | — | — | 3,371,867 | | 14,238 | | — | | 3,424,159 | |
Karina F. Padilla(7) Chief Financial Officer | 2022 | 415,192 | | 250,000 | | 1,750,429 | | 259,207 | | 151,088 | | 12,423 | | 2,838,339 | |
Christopher L. Bailey(8) Chief Business Officer, Former President, Proterra Powered & Energy | 2022 | 389,231 | | — | 2,146,188 | | 259,207 | | 205,700 | | 8,321 | | 3,008,647 | |
2021 | 202,650 | | — | 360,804 | | 688,538 | | 49,359 | | 923 | | 1,302,274 | |
Julian R. Soell(9) Chief Operating Officer, Former President, Proterra Transit | 2022 | 261,538 | | 250,000 | | 1,238,176 | | 173,718 | | 48,600 | | 6,154 | | 1,978,186 | |
JoAnn C. Covington(10) Former Chief Legal Officer, Head of Government Relations and Secretary | 2022 | 375,000 | | 292,813 | | 737,070 | | 230,408 | | 106,650 | | 25,382 | | 1,767,323 | |
(1)Amounts represent: (a) for Ms. Padilla a one-time sign on cash bonus paid to Ms. Padilla in 2022 pursuant to her offer letter; (b) for Mr. Soell a one-time sign on cash bonus paid to Mr. Soell in 2022 pursuant to his offer letter; (c) for Ms. Covington, the sum of (i) a recognition cash bonus of $40,000 paid in October 2022 for Ms. Covington's work serving, in addition to her other functions, as head of human resources from July to October 2022 while the Company was recruiting for a Chief People Officer, (ii) a retention bonus of $250,000 paid in September 2022 as described above in the Compensation Discussion and Analysis section titled "One-Time Awards", and (iii) $2,813 paid to Ms. Covington in 2022 as part of her 2021 annual incentive cash award due to an error in calculation of her 2021 award.
(2)Amounts represent the aggregate grant date fair value of restricted stock units (“RSUs”) calculated in accordance with FASB ASC Topic 718, without regard to potential forfeiture. The assumptions used in calculating these amounts are set forth in Note 11 to our financial statements for the year ended December 31, 2022, in our 2022 Annual Report on Form 10-K. Note that the amounts reported in this column reflect the aggregate accounting cost for these awards and do not necessarily correspond to the actual economic value that may be received by our NEOs from the awards or the target value used by the Board of Directors in granting such awards.
(3) Amounts represent the aggregate grant date fair value of the stock options calculated in accordance with FASB ASC Topic 718, without regard to potential forfeiture. The assumptions used in calculating this amount are set forth in Note 11 to our financial statements for the year ended December 31, 2022, in our 2022 Annual Report on Form 10-K. Note that the amounts reported in this column reflect the aggregate accounting cost for these awards and do not necessarily correspond to the actual economic value that may be received by our NEOs from the awards or the target value used by the Board of Directors in granting such awards.
(4)Amounts represent short term incentive plan awards earned pursuant to our Key Employee Incentive Plan. For additional information on how these awards were determined, see the section above titled "Short Term Incentive Plan" in our Compensation Discussion & Analysis.
(5) Amounts represent matching contributions made on behalf of our named executive officers under our 401(k) plan, company paid premiums for life insurance and accidental death and dismemberment ("AD&D") insurance, and reimbursement for financial planning services under a perquisite established by the Compensation and Leadership Development Committee in 2022 ,as follows:.
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Name | 401(k) Plan Matching Contributions ($) | Financial Planning Services ($) | Company Paid Premiums for Life and AD&D Insurance Coverage ($) | Total All Other Compensation ($) |
Gareth T. Joyce | 13,804 | 10,000 | 1,398 | 23,804 |
Karina F. Padilla | 12,423 | — | 1,354 | 12,423 |
Christopher L. Bailey | 8,321 | — | 1,398 | 8,321 |
Julian R. Soell | 6,154 | — | 685 | 6,154 |
JoAnn C. Covington | 15,382 | 10,000 | 1,407 | 25,382 |
(6)Mr. Joyce has been President, Chief Executive Officer and a director of the Company since January 2022. He served as President of the Company's wholly owned subsidiary, Proterra Operating Company, Inc. from September 2021 to December 2021 and as President of Proterra Powered & Energy for the Company and its subsidiary from November 2020 to September 2021.
(7)Ms. Padilla was appointed Chief Financial Officer effective January 1, 2022. Ms. Padilla resigned from her position as Chief Financial Officer effective May 15, 2023.
(8) Mr. Bailey served as our Senior Vice President, Proterra Energy from May 2021 to October 2021, and then as our President of Proterra Powered & Energy from October 2021 until March 1, 2023, when he was appointed Chief Business Officer for the Company and its subsidiary. The reported salary is less than the annual base salary disclosed in the Compensation Discussion and Analysis because Mr. Bailey's salary was increased from $375,000 to $400,000 in fiscal year 2022.
(9) Mr. Soell started employment with our Company and was appointed President of Proterra Transit effective May 1, 2022 and served in that capacity until he was appointed Chief Operating Officer effective March 1, 2023. The reported salary is less than the annual base salary disclosed in the Compensation Discussion and Analysis because Mr. Soell started employment in May 2022.
(10)Ms. Covington was appointed our Chief Legal Officer, Head of Government Relations and Secretary on June 14, 2021, but, was not a named executive officer before fiscal year 2022 and, as a result, no disclosure is made for fiscal years 2021 and 2020 in accordance with SEC rules. Ms. Covington resigned from her position as Chief Legal Officer, Head of Government Relations and Secretary effective March 27, 2023.
GRANTS OF PLAN BASED AWARDS DURING FISCAL YEAR-END 2022
The table below summarizes information regarding the incentive awards granted to each of our NEOs in 2022.
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Name | | | Estimated Future Payouts Under Non-Equity Incentive Plan Awards(1) | | Estimated Future Payouts Under Equity Incentive Plan Awards | All Other Stock Awards: Number of Shares of Stock or Units (#)(2) | All Other Option Awards: Number of Securities Underlying Options (#)(3) | Exercise or Base Price of Option Awards ($/Sh) | Grant Date Fair Value of Stock and Option Awards(1) ($)(4) |
Award Type | Grant Date | Threshold ($) | Target ($) | Maximum ($) | | Threshold (#) | Target (#) | Maximum (#) |
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Garth T. Joyce | Annual Cash Incentive | — | 312,500 | | 625,000 | | 937,500 | | | — | — | — | — | — | — | — |
Stock Options | 2/17/2022 | — | — | — | | — | — | — | — | 300,240 | | 8.73 | 1,355,794 | |
Time-based RSUs | 3/10/2022 | — | | — | | — | | | — | | — | | — | | 120,772 | | — | | — | | 867,143 | |
2/17/2022 | — | | — | | — | | | — | | — | | — | | 189,393 | | — | | — | | 1,653,401 | |
Karina F. Padilla (6) | Annual Cash Incentive | — | 159,375 | | 318,750 | | 478,125 | | | — | — | — | — | — | — | — | |
Stock Options | 3/10/2022 | — | — | — | | — | — | — | — | 65,425 | | 7.18 | 259,207 | |
Time-based RSUs | 2/17/2022 | — | | — | | — | | | — | | — | | — | | 73,863 | | — | | — | | 644,824 | |
3/10/2022 | — | | — | | — | | | — | | — | | — | | 153,984 | | — | | — | | 1,105,605 | |
Christopher L. Bailey | Annual Cash Incentive | — | 146,094 | | 292,188 | | 438,282 | | | — | — | — | — | — | — | — | |
Stock Options | 3/10/2022 | — | — | — | | — | — | — | — | 65,425 | | 7.18 | 259,207 | |
Time-based RSUs | 3/10/2022 | — | — | — | | — | — | — | 298,912 | | — | — | 2,146,188 | |
Julian R. Soell | Annual Cash Incentive(5) | — | 150,000 | | 300,000 | | 450,000 | | | — | — | — | — | — | — | — | |
Stock Options | 5/25/2022 | — | — | — | | — | — | — | — | 53,016 | | 5.82 | 173,718 | |
Time-based RSUs | 5/25/2022 | — | — | — | | — | — | — | 212,745 | | — | — | 1,238,176 | |
JoAnn C. Covington(7) | Annual Cash Incentive | — | 112,500 | | 225,000 | | 337,500 | | | — | — | — | — | — | — | — | |
Stock Options | 3/10/2022 | — | | — | | — | | | — | — | — | — | 58,156 | | 7.18 | 230,408 | |
Time-based RSUs | 3/10/2022 | — | — | — | | — | — | — | 102,656 | | — | — | 737,070 | |
(1)These columns present information about the potential payouts under our Short Term Incentive Plan for fiscal year 2022 if the Company met the threshold, target and maximum performance targets for an award under each of the performance metrics specified in the Plan, The actual amount paid to each NEO is reflected above in the Summary Compensation Table under the “Non-Equity Incentive Plan Compensation” column. For a more detailed description of the performance-based measures and actual payments under the Short Term Incentive Plan, see the discussion of the "Short Term Incentive Plan" above in the Compensation Discussion and Analysis.
(2)The amounts represent the number of restricted stock units ("RSUs") granted during fiscal year 2022. RSUs vest based on continued service through various vesting dates. The time-based RSU awards in connection with the new hire grants to Mr. Soell and Ms. Padilla vest in 4 equal annual installments on the anniversary of the vesting commencement date, which for Mr. Soell is May 25, 2022, and Ms. Padilla is January 25, 2022. The time-based RSU awards in connection with the Long Term Incentive Program grants to all of our NEO’s described in the Compensation Discussion and Analysis section above vest in 4 equal annual installments on the anniversary of the vesting commencement date, which for Mr. Joyce is January 1, 2022, and for the other NEO’s is March 25, 2022. The time-based RSU awards to Mr. Joyce, Ms. Padilla, Mr. Bailey, and Ms. Covington in connection with the One Time Equity awards described in the Compensation Discussion and Analysis section above vest in 2 equal installments eighteen months and three years from the vesting commencement date of March 25, 2022. As a general matter, time-based RSUs will cease vesting upon each employee’s last day of service. Time-based RSU awards are subject to potential vesting acceleration as described in the section titled “Potential Payments upon Termination or Change of Control”.
(3)The amounts represent the number of stock options granted during fiscal year 2022. Stock options vest based on continued service through various vesting dates. The time-based stock option awards in connection with Long Term Incentive Program grants to all of our NEO’s described in the Compensation Discussion and Analysis section above vest in 4 equal annual installments on the anniversary of the vesting commencement date, which for Mr. Joyce is January 1, 2022, and for the other NEO’s is March 25, 2022. As a general matter, time-based stock options will cease vesting upon each employee’s last day of service. Time-based stock option awards are subject to potential vesting acceleration as described in the section titled “Potential Payments upon Termination or Change of Control”.
(4) The amounts represent the aggregate grant date fair value of equity awards in accordance with FASB ASC Topic 718, without regard to potential forfeiture. The assumptions used in calculating these amounts are set forth in Note 11 to our financial statements for the year ended December 31, 2022, in our 2022 Annual Report.
(5) The amounts represent the potential full-year payouts that Mr. Soell could have received under our Short Term Incentive Plan for fiscal year 2022. Because Mr. Soell's start date with the Company was May 1, 2022, his actual 2022 annual bonus payout was pro-rated based on his start date.
(6) Ms. Padilla resigned from her position as Chief Financial Officer effective May 15, 2023.
(7) Ms. Covington resigned from her position as Chief Legal Officer, Head of Government Relations and Secretary effective March 27, 2023.
DESCRIPTION OF COMPENSATION ARRANGEMENTS
OFFER LETTER AGREEMENT WITH GARETH T. JOYCE
In connection with his appointment as President of the Company beginning September 13, 2021, Gareth T. Joyce entered into an executive offer letter agreement with the Company memorializing the terms of his employment. This agreement with Mr. Joyce provided for an increase in his base salary from $340,000 to $450,000, a target annual bonus opportunity of 75% of base salary and an equity award opportunity that is subject to approval by the Compensation and Leadership Development Committee. In connection with Mr. Joyce's transition to the role of both President and Chief Executive Officer effective January 1, 2022, Mr. Joyce entered into an executive offer letter agreement with the Company pursuant to which his salary was set at $500,000, his target annual bonus opportunity was increased to 125% of base salary, he received a new equity grant valued at $3,000,000 at the time of award,, and he became eligible to receive additional equity awards as part of the Company’s Long Term Incentive Program, subject to approval by the Compensation and Leadership Development Committee. Mr. Joyce was also entitled to the Company's standard form of severance agreement for chief executives described in the section of this document titled “Severance Benefits and Potential Payments Upon Termination or Change of Control.”
OFFER LETTER AGREEMENT WITH KARINA F. PADILLA
In connection with her appointment as Chief Financial Officer on January 1, 2022, the Company entered into an executive offer letter agreement with Ms. Padilla, pursuant to which she was entitled to an annual base salary of $425,000, a bonus target under the Company’s Key Employee Incentive Plan of 75% of her base salary, and a signing bonus of $250,000. The offer letter also provided that Ms. Padilla would receive a Restricted Stock Unit award under the Company’s 2021 Equity Incentive Plan of $585,000 in value at the time of grant with four-year ratable vesting, and that she would be eligible to receive additional equity awards as part of the Company’s Long Term Incentive Program, subject to approval by the Compensation and Leadership Development Committee. Ms. Padilla was also entitled to the Company's standard form of severance agreement for executives described in the section of this document titled “Severance Benefits and Potential Payments Upon Termination or Change of Control.”
OFFER LETTER AGREEMENT WITH CHRISTOPHER L. BAILEY
On November 4, 2021, Mr. Bailey entered into an amended and restated offer letter that amended his offer letter dated April 30, 2021. The amended and restated offer letter entitled Mr. Bailey to an annual base salary and participation in the Company's short and long term incentive plans.
OFFER LETTER AGREEMENT WITH JULIAN R. SOELL
On August 1, 2022, Mr. Soell entered into an amended and restated offer letter that amended his offer letter dated April 1, 2022. The amended and restated offer letter entitled Mr. Soell to an annual base salary, participation in the Company's short and long term incentive plans, and the Company's standard form of severance agreement for executives described in the section of this document titled “Severance Benefits and Potential Payments Upon Termination or Change of Control.”
OFFER LETTER AGREEMENT WITH JOANN C. COVINGTON
On April 13, 2022, Ms. Covington entered into an amended and restated offer letter that amended her offer letter dated March 1, 2017. The amended and restated offer letter entitled Ms. Covington to an annual base salary, participation in the Company's short and long term incentive plans, and the Company's standard form of severance agreement for executives described in the section of this document titled “Severance Benefits and Potential Payments Upon Termination or Change of Control.”
SEPARATION AGREEMENT WITH JOANN C. COVINGTON
Ms. Covington tendered her resignation as Chief Legal Officer, Head of Government Relations and Secretary on March 20, 2023. On March 24, 2023, the Company and Ms. Covington executed a Separation Agreement (the “Separation Agreement”), pursuant to which Ms. Covington will remain at the Company as a non-officer employee until June 30, 2023, to provide support during the transition to a new Chief Legal Officer, unless an earlier date is mutually agreed (such date, the “Separation Date”). During the transition period, Ms. Covington will receive the compensation and benefits provided under her existing terms of employment. Under the Separation Agreement, in exchange for providing transition support through the Separation Date and agreeing to a waiver and general release of all claims in favor of the Company and its affiliates, Ms. Covington will receive, among other benefits, a lump-sum payment equal to $187,500, which represents six months of Ms. Covington’s base compensation, and an additional lump-sum payment equal to $13,380, equivalent to six months of Ms. Covington’s monthly premium for the cost of benefit continuation for health benefits. The payments will be made to Ms. Covington within seven days following the Separation Date. Ms. Covington also remains eligible for change in control benefits. In addition, the Company agreed to take the steps necessary to extend the exercise period for Ms. Covington’s vested stock options under the Company’s 2010 Equity Incentive Plan to the earlier of (i) twelve months from the Separation Date or (ii) the expiration date of each such option.
OFFER LETTER AGREEMENT WITH DAVID S. BLACK
In connection with his appointment as Chief Financial Officer and Treasurer, the Company has entered into an offer letter (“Offer Letter”) with Mr. Black, which provides that his employment will commence on or about May 15, 2023 and outlines his duties and responsibilities and compensation terms. Pursuant to his Offer Letter, Mr. Black is entitled to receive an annual base salary of $450,000, and a bonus target under the Company’s Key Employee Incentive Plan of 75% of his base salary. In addition, the Company intends to grant Mr. Black an equity award with four-year ratable vesting under the Company’s 2021 Equity Incentive Plan comprised of 50% restricted stock units and 50% stock options and valued at $800,000 in accordance with the Company’s grant valuation procedures at the time of grant. The Offer Letter also provides that the Company will recommend to the Board or the compensation committee of the Board that Mr. Black be eligible in fiscal 2024 for an equity incentive award with four year ratable vesting under the Company’s 2021 Equity Incentive Plan of $900,000 in value in accordance with the Company’s grant valuation procedures at the time of grant. Mr. Black will also be entitled to enter into the Company’s standard form of severance agreement for executives described in the section of this document titled “Severance Benefits and Potential Payments Upon Termination or Change of Control.”
OUTSTANDING EQUITY AWARDS AT FISCAL YEAR END
The table below summarizes the number of shares of common stock underlying outstanding equity incentive plan awards for each NEO as of December 31, 2022.
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| | Option Awards(1) | | Stock Awards(1) |
Name | Grant Date | Number of Securities Underlying Unexercised Options (#) Exercisable | Number of Securities Underlying Unexercised Options (#) Unexercisable | Equity incentive plan awards: number of securities underlying unexercised unearned options (#) | Option Exercise Price ($) | Option Expiration Date | | Number of Shares or Units of Stock that Have Not Vested (#) | Market Value of Shares or Units of Stock that Have Not Vested ($)(2) |
Gareth T. Joyce | 3/10/2022(3) | — | | — | | — | | | | | 120,772 | | 455,310 | |
2/17/2022(4) | — | | 300,240 | | — | | 8.73 | | 2/16/2032 | | 189,393 | | 714,012 | |
10/21/2021(5) | 12,917 | | 38,749 | | — | | 9.83 | | 10/20/2031 | | 21,851 | | 82,378 | |
12/21/2020(6) | 366,416 | | 408,320 | | — | | 4.78 | | 12/20/2030 | | — | | — | |
Karina F. Padilla (22) | 3/10/2022(7) | — | | 65,425 | | — | | 7.18 | | 3/9/2032 | | 81,521 | | 307,334 | |
3/10/2022(3) | — | | — | | — | | | | | 72,463 | | 273,186 | |
2/17/2022(8) | — | | — | | — | | | | | 73,863 | | 278,464 | |
Christopher L. Bailey | 3/10/2022(7) | — | | 65,425 | | — | | 7.18 | | 3/9/2032 | | 81,521 | | 307,334 | |
3/10/2022(3) | — | | — | | — | | | | | 217,391 | | 819,564 | |
9/2/2021(9) | — | | — | | — | | | | | 23,883 | | 90,039 | |
5/20/2021(10) | 33,468 | | 55,781 | | — | | 13.68 | | 5/19/2031 | | — | | — | |
Julian R. Soell | 5/25/2022(11)(12) | — | | 53,016 | | — | | 5.82 | | 5/24/2032 | | 76,588 | | 288,737 | |
5/25/2022(12) | — | | — | | — | | | | | 136,157 | | 513,312 | |
JoAnn C. Covington (23) | 3/10/2022(7) | — | | 58,156 | | — | | 7.18 | | 3/9/2032 | | 72,463 | | 273,186 | |
3/10/2022(3) | — | | — | | — | | | | | 30,193 | | 113,828 | |
9/2/2021(13) | 12,588 | | 37,762 | | — | | 11.33 | | 9/1/2031 | | 20,970 | | 79,057 | |
12/21/2020(14) | 13,388 | | 13,387 | | — | | 4.78 | | 12/20/2030 | | — | | — | |
8/20/2020(15) | 111,560 | | 66,939 | | — | | 4.62 | | 8/19/2030 | | — | | — | |
8/20/2020(16) | 37,652 | | 29,285 | | — | | 4.62 | | 8/19/2030 | | — | | — | |
12/13/2019(17) | 16,734 | | 5,578 | | — | | 6.00 | | 12/12/2029 | | — | | — | |
11/20/2019(18) | 16,734 | | 5,578 | | — | | 6.00 | | 11/19/2029 | | — | | — | |
12/29/2018(19) | 44,625 | | — | | — | | 5.41 | | 12/28/2028 | | — | | — | |
11/16/2018(20) | 66,937 | | — | | — | | 5.41 | | 11/15/2028 | | — | | — | |
5/30/2017(21) | 446,249 | | — | | — | | 2.18 | | 5/29/2027 | | — | | — | |
(1)Outstanding equity awards made (i) prior to June 14, 2021 were granted under our 2010 Equity Incentive Plan (the “2010 Plan”) and (ii) after June 14, 2021, equity awards were granted under our 2021 Equity Incentive Plan (the “2021 Plan”) which was approved by stockholders on June 11, 2021 in connection with the business combination discussed in our Annual Report on Form 10K for the fiscal year ending December 31, 2021. As a general matter, time-based RSUs and stock options will cease vesting upon each employee’s last day of service. Equity awards are subject to potential vesting acceleration under "double trigger" change-in-control provisions of our executive severance agreements as described in the section titled “Severance Benefits and Potential Payments upon Termination or Change of Control.”
(2)The market value of unvested RSUs reflected in the table have been calculated by multiplying the number of unvested RSUs by $3.77, Proterra's closing stock price on December 30, 2022, the last trading day of fiscal year 2022.
(3)RSUs vest 50% on September 25, 2023 and 50% on March 25, 2025.
(4)Options and RSUs vest 25% each year beginning on January 1, 2023.
(5)Options and RSUs vest 25% each year beginning on August 25, 2022.
(6)Options vest 25% on November 17, 2021 and then 6.25% quarterly thereafter.
(7)Options and RSUs vest 25% each year beginning on March 25, 2023.
(8)RSUs vest 25% each year beginning on January 25, 2023.
(9)RSUs vest 25% each year beginning on May 25, 2022.
(10)Options vest 25% on May 17, 2022 and then 6.25% quarterly thereafter.
(11)Options vest 25% each year beginning on May 2, 2023.
(12)RSUs vest 25% each year beginning on May 25, 2023.
(13)Options and RSUs vest 25% each year beginning on September 1, 2022.
(14)Options vest 6.25% each quarter following the December 21, 2020 vesting commencement date.
(15)Options vest 6.25% each quarter following the June 1, 2020 vesting commencement date.
(16)Options vest 6.25% each quarter following the August 20, 2020 vesting commencement date.
(17)Options vest 6.25% each quarter following the December 13, 2019 vesting commencement date.
(18)Options vest 6.25% each quarter following the November 20, 2019 vesting commencement date.
(19)Options vest 6.25% each quarter following the December 28, 2018 vesting commencement date.
(20)Options vest 6.25% each quarter following the November 13, 2018 vesting commencement date.
(21)Options vest 25% on April 17, 2018 and then 6.25% quarterly thereafter.
(22)Ms. Padilla resigned from her position as Chief Financial Officer effective May 15, 2023. Her last day as a service provider is expected to be June 2, 2023.
(23) Ms. Covington resigned from her position as Chief Legal Officer, Head of Government Relations and Secretary effective March 27, 2023. Her last day as service provider is expected to be June 30, 2023.
OPTIONS EXERCISES AND STOCK VESTED DURING 2022
The table below summarizes information regarding the number of shares acquired upon the exercise of stock options (with the value realized based on the difference between the closing price per share on Nasdaq of our common stock and the exercise price on the date of exercise) and the vesting of RSUs in 2022 previously granted to each of our NEOs (with the value realized based on the closing price per share on Nasdaq of our common stock on the date of vesting).
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| Option Awards | | Stock Awards |
Name | Number of Shares Acquired on Exercise (#) | Value Realized on Exercise ($) | | Number of Shares Acquired on Vesting (#) | Value Realized on Vesting ($) |
Gareth T. Joyce | 20,950 | | 39,386 | | | 7,284 | | 46,909 | |
Karina F. Padilla | — | | — | | | — | | — | |
Christopher L. Bailey | — | | — | | | 7,962 | | 46,339 | |
Julian R. Soell | — | | — | | | — | | — | |
JoAnn C. Covington | 52,446 | | 279,537 | | | 6,991 | | 42,226 | |
SEVERANCE BENEFITS AND POTENTIAL PAYMENTS UPON TERMINATION OR CHANGE OF CONTROL
We have entered into change-in-control and severance agreements (“Severance Agreements”) with our Named Executive Officers.
An NEO (other than our President and Chief Executive Officer) who is terminated by us without cause outside of a change in control (as such term is defined below) will receive, in exchange for a customary release of claims: (i) a severance payment of six months (the “Severance Period)” base salary in equal installments and (ii) payment of premiums for continued medical benefits for up to six months. If our President and Chief Executive Officer is terminated by us without cause or he resigns for good reason (as such term is defined below) outside of a change in control he will receive, in exchange for a customary release of claims: (i) a severance payment of twelve months (the “President and CEO Severance Period”) base salary in equal installments and (ii) payment of premiums for continued medical benefits for up to twelve months.
If an NEO’s employment is terminated by us without cause or if the NEO resigns for good reason within the three months preceding a change in control (but after a legally binding and definitive agreement for a potential change of control has been executed) or within the twelve months following a change in control, the Severance Agreement provides the following benefits in exchange for a customary release of claims: (i) a severance payment of twelve months base salary in equal installments and then-current target bonus opportunity (at the rates in effect immediately prior to the actions that resulted in the termination) (18 months for our President and Chief Executive Officer), (ii) 100% acceleration of any then-unvested equity awards (including equity awards that vest, in whole or in part, upon satisfaction of performance criteria), and (iii) payment of premiums for continued medical benefits for up to twelve months (18 months for our President and Chief Executive Officer)
For purposes of all of the Severance Agreements:
“Cause” means (i) an unauthorized use or disclosure by the NEO of the Company’s or its subsidiaries’ confidential information or trade secrets, which use or disclosure causes or is reasonably likely to cause material harm to the Company or its subsidiaries, (ii) a material breach of any agreement between the NEO and the Company or its subsidiaries, (iii) a material failure to comply with the Company’s or its subsidiaries’ written policies or rules that has caused or is reasonably likely to cause material injury to the Company, its successor, or its affiliates, or any of their business, (iv) conviction of, or plea of “guilty” or “no contest” to, a felony under the laws of the United States or any state thereof, (v) willful misconduct that has caused or is reasonably likely to cause material injury to the Company, its successor, or its affiliates, or any of their business, (vi) embezzlement, (vii) failure to cooperate with the Company or its subsidiaries in any investigation or formal proceeding if the Company or its subsidiary, as applicable, has requested the NEO’s reasonable cooperation, (viii) violation of any applicable federal, state or foreign statutes, laws or regulations or (ix) a continued failure to perform assigned duties after receiving written notification of such failure from the Company’s or its subsidiaries’, as applicable, Chief Executive Officer; provided that the NEO must be provided with written notice of their termination for “Cause” and the NEO must be provided with a thirty (30) day period following their receipt of such notice to cure the event(s) that trigger “Cause,” with the Company’s or its subsidiaries’, as applicable, Board of Directors making the final determination whether the NEO has cured any Cause.
“Good Reason” means, without the NEO’s consent, (i) a material reduction in the NEO’s level of responsibility and/or scope of authority, (ii) a reduction by more than 10% in NEO’s base salary (other than a reduction generally applicable to executive officers of the Company or its subsidiary, as applicable, and in generally the same proportion as for the NEO), or (iii) relocation of the NEO’s principal workplace by more than thirty-five (35) miles from the NEO’s then current place of employment. For the purpose of clause (i), a change in responsibility shall not be deemed to occur (A) solely because the NEO is part of a larger organization or (B) solely because of a change in title. For the NEO to receive the benefits under this Agreement as a result of a voluntary resignation under this subsection (e), all of the following requirements must be satisfied: (1) the NEO must provide notice to the Company or its subsidiary, as applicable, of their intent to assert Good Reason within sixty (60) days of the initial existence of one or more of the conditions set forth in subclauses (i) through (iii); (2) the Company or its subsidiary, as applicable, will have thirty (30) days (the “Company Cure Period”) from the date of such notice to remedy the condition and, if it does so, the NEO may withdraw their resignation or may resign with no benefits; and (3) any termination of employment under this provision must occur within ten (10) days of the earlier of expiration of the Company Cure Period or written notice from the Company or one of its subsidiaries, as applicable, that it will not undertake to cure the condition set forth in subclauses (i) through (iii). Should the Company or one of its subsidiaries, as applicable, remedy the condition as set forth above and then one or more of the conditions arises again within twelve months following the occurrence of a Change in Control, the NEO may assert Good Reason again subject to all of the conditions set forth herein.
“Change in Control” means the occurrence of any of the following events, provided that the transaction (including any series of transactions) also qualifies as a change in control under U.S. Treasury Regulation 1.409A-3(i)(5)(v) or 1.409A-3(i)(5)(vii):
(i) Change in Ownership of the Company. A change in the ownership of the Company which occurs on the date that any one person, or more than one person acting as a group (“Person”), acquires ownership of the stock of the Company that, together with the stock held by such Person, constitutes more than 50% of the total voting power of the stock of the Company, except that any change in the ownership of the stock of the Company as a result of a private financing of the Company that is approved by the Board will not be considered a Change in Control; or
(ii) Change in Effective Control of the Company. A change in the effective control of the Company which occurs on the date that a majority of members of the Board is replaced during any twelve (12) month period by Directors whose appointment or election is not endorsed by a majority of the members of the Board prior to the date of the appointment or election. For purposes of this clause (ii), if any Person is considered to be in effective control of the Company, the acquisition of additional control of the Company by the same Person will not be considered a Change in Control; or
(iii) Change in Ownership of a Substantial Portion of the Company’s Assets. A change in the ownership of a substantial portion of the Company’s assets which occurs on the date that any Person acquires (or has acquired during the twelve (12) month period ending on the date of the most recent acquisition by such person or persons) assets from the Company that have a total gross fair market value equal to or more than 50% of the total gross fair market value of all of the assets of the Company immediately prior to such acquisition or acquisitions. For purposes of this subsection (iii), gross fair market value means the value of the assets of the Company, or the value of the assets being disposed of, determined without regard to any liabilities associated with such assets.
Each Severance Agreement is in effect until the earlier of (i) the termination of the executive officer’s employment other than in a situation described above and (ii) the date that we have met all our obligations under the Severance Agreement following the termination of the executive officer’s employment due to a situation described above.
The benefits under the Severance Agreements supersede all other cash severance and vesting acceleration arrangements (excluding equity awards that vest, in whole or in part, upon satisfaction of performance criteria, which will be governed by the terms of the applicable performance-based equity awards). All severance payments to our NEOs are subject to the execution and non-revocation of an effective release in the Company’s favor. In addition, the Severance Agreements include a non-competition covenant applicable during the NEO’s employment and a cooperation and non-disparagement covenant pursuant to which the NEO shall use best efforts to assist with transition of their duties during the Severance Period or the President and CEO Severance Period (whichever is applicable) and shall not disparage the Company, its subsidiaries or the members of the Board or their officers and employees following their separation with the Company.
The table below quantifies the payments in the event of a qualifying termination or a change-in-control ("CIC") qualifying termination to our NEOs as of December 31, 2022 and assuming the price per share of the Company's securities is the closing market price as of that date. For additional information, see the above discussion of "Potential Payments Upon Termination or Change of Control" in our Compensation Discussion & Analysis section titled "Other Compensation Elements."
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| Qualifying Termination | | Qualifying Termination Upon Change-in-Control |
Name | Base Salary ($)(1) | COBRA Payments ($)(2) | Total ($) | | Base Salary and Target Bonus ($)(3) | COBRA Payments ($)(4) | Unvested Equity ($)(5) | Total ($) |
Gareth T. Joyce | 500,000 | | — | | 500,000 | | | 1,375,000 | | — | | 1,251,700 | | 2,626,700 | |
Karina F. Padilla | 212,500 | | 12,575 | | 225,075 | | | 743,750 | | 25,151 | | 858,983 | | 1,627,884 | |
Christopher L. Bailey | 200,000 | | 11,470 | | 211,470 | | | 700,000 | | 22,941 | | 1,216,937 | | 1,939,878 | |
Julian R. Soell | 200,000 | | 12,575 | | 212,575 | | | 700,000 | | 25,151 | | 802,049 | | 1,527,200 | |
JoAnn C. Covington | 187,500 | | 12,575 | | 200,075 | | | 600,000 | | 25,151 | | 466,070 | | 1,091,221 | |
(1)Represents twelve months of base salary for Mr. Joyce and six months of base salary for Ms. Padilla, Mr. Bailey, Mr. Soell, and Ms. Covington.
(2) Represents payment of premiums for continued medical benefits for up to six months for Ms. Padilla, Mr. Bailey, Mr. Soell, and Ms. Covington. Mr. Joyce did not elect medical coverage for fiscal year 2022 and therefore, would not receive premiums for continued medical benefits.
(3) Represents eighteen months of base salary for Mr. Joyce and twelve months of base salary for Ms. Padilla, Mr. Bailey, Mr. Soell, and Ms. Covington and each executive's target bonus in fiscal year 2022.
(4) Represents payment of premiums for continued medical benefits for up to twelve months for Ms. Padilla, Mr. Bailey, Mr. Soell, and Ms. Covington. Mr. Joyce did not elect medical coverage for fiscal year 2022 and therefore, would not receive premiums for continued medical benefits.
(5) The market value of unvested equity that would vest and payout due to a qualifying termination upon a change-in-control have been calculated by multiplying the number of unvested RSUs by $3.77, Proterra's closing stock price on December 30, 2022, the last trading day of fiscal year 2022. As of fiscal year end 2022, all unvested stock options held by our NEOs had no value.
CEO PAY RATIO
As required by SEC rules, we are providing disclosure regarding the ratio of the annual total compensation of our CEO to the annual total compensation of our median employee. The ratio is a reasonable estimate calculated in a manner consistent with SEC rules and is based on our payroll and employment records and the methodology described below.
Nearly all of our employees are located in the United States. Pursuant to the SEC rules, to identify our median employee, we excluded from the calculation seven employees based in Canada under the de minimis exemption. After applying the de minimis exemption, we selected our median employee from our employee population of 1,183 U.S. full time, part time, and temporary employees as of December 31, 2022.
To determine our median employee, we used full year 2022 gross compensation data from our payroll system. Compensation was annualized for all newly hired employees who did not work a full calendar year 2022. Compensation data included wages, overtime, non-performance based bonuses, and paid time off as this reflects the most comparable measure of compensation across our employee population. While many of our employees are compensated with equity awards, not all of our employees are, and many compensation structures in the Company rely on cash compensation exclusively. Thus, we excluded the fair value of stock awards granted in 2022 from the calculation used to identify the median employee. Similarly, because the majority of our employees do not participate in a variable performance-based compensation plan, we excluded performance-based bonuses from the calculation. Because the SEC rules allow companies to apply various methodologies to determine the median employee, the pay ratio reported by us may not be comparable to the pay ratio reported by other companies.
After identifying the median employee, we calculated the total annual compensation for the median employee in the same manner used to determine the compensation shown for our CEO in the Summary Compensation Table.
Based upon the methodology described above, our CEO’s total annual compensation as reported above in the Summary Compensation Table above was $4,738,555, and the total annual compensation for our median employee, an hourly Field Service Technician located in Greenville, South Carolina, was $81,477. The ratio of these two amounts is 58:1.
DIRECTOR COMPENSATION TABLE
The table below summarizes the total compensation earned by or paid to our non-employee directors for the fiscal year ended December 31, 2022.
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Name | Fees Earned or Paid in Cash ($)(1) | Stock Awards ($)(2) | Non-equity Incentive Plan Compensation ($) | Total ($) |
John J. Allen | 105,000 | | 110,225 | | — | 215,225 | |
Jochen M. Goetz(3) | — | | — | | — | — | |
Jan R. Hauser(4) | 42,021 | | 270,132 | | — | 312,153 | |
Mary Louise (ML) Krakauer(5) | 80,986 | | 275,562 | | — | 356,548 | |
Roger M. Nielsen(6) | 62,414 | | 225,542 | | — | 287,956 | |
Brook F. Porter(7) | 4,007 | | 192,889 | | — | 196,896 | |
Joan Robinson-Berry (8) | 75,000 | | 110,225 | | — | 185,225 | |
Jeannine P. Sargent | 110,000 | | 110,225 | | — | 220,225 | |
Constance E. Skidmore | 90,000 | | 110,225 | | — | 200,225 | |
Michael D. Smith | 75,000 | | 110,225 | | — | 185,225 | |
(1)The amounts disclosed represent an annual cash retainer awarded pursuant to our Non-Employee Director Compensation Policy described below to our non-employee directors, other than Mr. Porter, in the amount of $75,000, which is paid quarterly in arrears, subject
to continuous service. Mr. Porter elected to receive such compensation as RSUs, and accordingly received 9,469 RSUs that vest quarterly subject to continuous service.
(2)The amounts disclosed represent the aggregate grant date fair value of RSUs granted to our non-employee directors during 2022 under our 2021 Plan, computed in accordance with FASB ASC Topic 718. The assumptions used in calculating the grant date fair value of the RSUs reported in the Stock Awards column are set forth in Note 11 to our audited financial statements included in our Annual Report on Form 10-K for the year ended December 31, 2022, which was filed with the SEC on March 17, 2023. These amounts do not reflect the actual economic value that will be realized by the directors upon the vesting of the RSUs or the sale of any of the common stock acquired under such RSUs. Per share RSU valuations are based on the average of the closing price of our common stock for 20 trading days prior to each respective award date. On February 17, 2022, (i) each non-employee director serving on the Board received his or her annual RSU grant for 12,626 shares except for Ms. Krakauer who received an initial grant award described below and Mr. Nielsen and Ms. Hauser who were not yet members of our Board, (ii) Mr. Porter also received his RSU grant of 9,469 shares in lieu of the annual cash retainer awarded pursuant to our Non-Employee Director Compensation Policy, and (iii) Ms. Krakauer received her RSU grant for 31,565 shares for her initial appointment as a new director. All initial director grants vest 6.25% each quarter over four years. An annual director grant is not provided in the same year that the initial grant to a director is awarded. The grant date fair value per share for these awards as determined under FASB ASC Topic 718 was $8.73. On March 9, 2022, Mr. Nielsen received his RSU grant of 30,193 shares for his initial appointment as a new director. The grant date fair value per share for this award as determined under FASB ASC Topic 718 was $7.47. On August 22, 2022, Ms. Hauser received her RSU grant of 41,946 shares for her initial appointment as a new director. The grant date fair value per share for these awards as determined under FASB ASC Topic 718 was $6.44
(3)Due to internal policies of his employer, Daimler Trucks AG, Mr. Goetz did not receive any compensation for his service on the Board. Mr. Goetz resigned from our Board on March 2, 2022.
(4)Ms. Hauser was appointed to our Board effective June 9, 2022.
(5)Ms. Krakauer was appointed as Chair of our Compensation and Leadership Development Committee effective May 26, 2022.
(6)Mr. Nielsen was appointed to our Board effective March 2, 2022.
(7)Mr. Porter stepped down as Chair of our Compensation and Leadership Development Committee on May 25, 2022, and fees for his service as Chair of the Committee were prorated.
(8)Ms. Robinson-Berry resigned from our Board effective on March 22, 2023.
The table set forth below presents the aggregate number of shares of our common stock underlying outstanding option awards and RSU awards held by each of the directors listed in the table above as of December 31, 2022:
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Name | Number of Shares Underlying Options | Number of Shares Underlying RSUs |
John J. Allen | 5,069,956 | | — | |
Jochen Goetz (1) | — | | — | |
Jan R. Hauser | — | | 36,703 | |
Mary Louise (ML) Krakauer | — | | 23,674 | |
Roger M. Nielsen | — | | 24,532 | |
Brook F. Porter | 265,518 | | — | |
Joan Robinson-Berry (2) | 36,880 | | 4,152 | |
Jeannine P. Sargent | 265,518 | | — | |
Constance E. Skidmore | 265,518 | | — | |
Michael D. Smith | 265,518 | | — | |
(1)Mr. Goetz resigned from our board effective March 2, 2022.
(2)Ms. Robinson-Berry resigned from our board effective March 22, 2023.
Non-Employee Director Compensation Policy
We maintain a Non-Employee Director Compensation Policy designed to align non-employee director compensation with the achievement of our business objectives and the creation of stockholder value, while enabling us to attract, retain, incentivize and reward directors who contribute to our long-term success.
Our Board reviews director compensation periodically to ensure that director compensation remains competitive and consistent with standards of good governance so that we are able to responsibly recruit and retain qualified directors. The Compensation and Leadership Development Committee considers the
responsibilities and time commitment of Proterra’s directors, pay practices of the Company's peer group, and recommendations from its independent compensation consultant to make recommendations regarding the type and amount of compensation for non-employee directors, and makes recommendations to the Board.
The Board amended the policy in December 2021 to provide for a cash retainer for a non-executive chair and to adjust the timing of the grant of annual equity awards from the date of the Annual Meeting to the first fiscal quarter. The Board further amended the policy on December 14, 2022, to (1) eliminate the initial RSU grant of $250,000 in value, (2) increase the annual RSU grant from $100,000 in value to $150,000 in value, and (3) to increase the cash retainers for the Chair of the Compensation and Leadership Development Committee and the Chair of the Nominating and ESG Committee from $10,000 per year to $15,000 per year.
Under the Non-Employee Director Compensation Policy, as amended, each non-employee director is eligible to receive the cash and equity compensation for Board services described below. Each director will also be reimbursed for reasonable, customary and documented travel and other expenses to attend meetings of our Board or its committees and to attend director training. Pursuant to this policy, non-employee directors were eligible to receive the compensation described below.
Cash Compensation
Non-employee directors are entitled to receive the following cash compensation for their service under our director compensation policy:
•Board Member: $75,000
•Non-Executive Chair of the Board: $30,000
•Lead Independent Director: $25,000
•Audit Committee Chair: $15,000
•Compensation and Leadership Development Committee Chair: $15,000
•Nominating and ESG Committee Chair: $15,000
All cash payments to directors are paid quarterly in arrears prorated for any portion of a quarter that a director is not serving on our Board. Each director may make an annual election to receive their $75,000 annual cash retainer in RSUs. If so elected, the RSUs will vest on March 31, June 30, September 30, and December 31 over a one-year period following the grant date, subject to the director’s continued service on each applicable vesting date and provided the vesting conditions under the 2021 Plan are met. If a Director’s service terminates early in a given quarter, the RSUs for the partial period of service in the quarter that services terminate vest daily for the period of time served
Equity Compensation
Annual Award
During the first fiscal quarter each year, each non-employee director will be granted RSUs with a value equal to $150,000 at the time of grant pursuant to grant valuation practices determined by the Compensation and Leadership Development Committee. These annual director awards will vest quarterly over a one-year period following the grant date, subject to the director’s continued service on each applicable vesting date. A non-employee director who begins serving on the Board during the year will receive a pro-rated grant for the first partial year of service.
The 2021 Equity Incentive Plan provides that no non-employee director may receive awards with an aggregate fair value on the date of grant that, when combined with cash compensation received for service as a director, exceeds $750,000 in a calendar year.
Our Board adopted stock ownership guidelines that require each member of the Board to achieve stock ownership with a value equal to five times his or her annual cash compensation within five years of becoming a Board member.
COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
During the last fiscal year, Ms. Krakauer, Mr. Porter and Mr. Smith served as members of our Compensation and Leadership Development Committee. None of the members of our Compensation and Leadership Development Committee was an officer or employee of our company at the time of his or her service on the Compensation and Leadership Development Committee or prior to such service. None of our executive officers currently serves, or in the past year has served, as a member of the board of directors or Compensation and Leadership Development Committee (or other board committee performing equivalent functions) of any entity that has one or more of its executive officers serving on our Board or Compensation and Leadership Development Committee.
REPORT OF THE COMPENSATION AND LEADERSHIP DEVELOPMENT COMMITTEE OF THE BOARD
The Compensation and Leadership Development Committee has reviewed and discussed with management the Compensation Discussion and Analysis as set forth in this Amendment No. 1 to the Company’s Annual Report on Form 10-K for the period ending December 31, 2022. Based upon this review and discussion, the Compensation and Leadership Development Committee recommended to the Board of Directors that the Compensation Discussion and Analysis be incorporated in this Amendment No. 1 to the Company’s Annual Report on Form 10-K for its fiscal year ended December 31, 2022.
Respectfully submitted by the Compensation and Leadership Development Committee of the Board of Directors.
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Mary Louise Krakauer, Chair | Brook F. Porter | Michael D. Smith |